The City of Chino Hills is experiencing unprecedented growth both in the residential and commercial real estate sectors, bringing with it: new housing and industrial, warehouse, retail, hospitality and apartment developments. In this issue of the Chino Hills Real Estate Agent Guide, The economics of Chino Hills real estate, insights and the opportunities they present, we provide useful insights on: the factors driving the unprecedented real estate growth in each real estate sector, explore new residential and commercial real estate developments, and provide insight on how and what will drive real estate in Chino Hills in the future.
Residential Real Estate
The City of Chino Hills experienced record setting growth for the building of new homes and residential developments beginning in 2018, brought on by demand by those seeking an alternative to Walnut and Diamond Bar, whose average home prices are near the high $900,000 range. Factors driving the demand for Chino Hills homes include: an 8 out of 10 rated School District grade, picturesque rolling hills and a centralized location, because Chino Hills is a City on the border of Orange, Riverside, San Bernardino and Los Angeles Counties, allowing for the greatest accessibility to all 4 counties for business, employment or recreation.
Among the new Chino Hills homes developments are: Vila Borba, Founders, Lago Los Serranos and Bristol. Vila Borba offers 91 single family homes, Founders offers 76 dwelling units, Lago Los Serranos offers 95 units of townhomes, and Bristol offers 150 homes as a combination of townhomes and single family, detached homes. The four new Chino Hills homes developments were approved many years before 2018 and construction began in the early part of 2017, because the Federal Reserve began to raise interest rates for the first time since December 2016, which sent real estate developers the message that the United States economy was near full employment and that inflation was at its bare minimum, explaining why many local Chino Hills residents woke up one morning to all 4 housing developments being constructed simultaneously. Added explanation and details on the 2 economic factors that drove the beginnings of unprecedented growth for Chino Hills homes: for real estate developers, inflation being under control and being able to borrow money at low interest rates are green lights to begin and quickly complete construction. The alternative to low interest rates and near 0 inflation is high interest rates and high inflation, which causes the purchasing power of money to decrease. So, high inflation and interest rates creates excessive risk for real estate developers and the banks who loan them money, with the only solution being to inflate the selling price of the Chino Hills homes, once built, to beyond reasonable, allowing the banks and developers to decrease their risk. All of the ingredients are now in place for a housing bubble, with an impending housing crash, which is what we saw in 2008, during the recession, credit and housing crises. The foreseeable future for Chino Hills housing and new residential developments remains stable and in high demand, trends we see continuing on through 2020, because of the availability of ample amounts of buildable land in Chino Hills and as more and more economic jobs reports indicate, a continuous and upward trend in employment, coupled with a healthy U.S.A economy.
Commercial Real Estate
As more business operators seek a cost effective alternative to leasing or purchasing City of Industry or Ontario warehouses and industrial real estate, Chino and Chino Hills is attracting business operators, by approving several new warehouse and industrial real estate developments. With a median household income of over $100,000, per the United States Census Bureau, Chino Hills commercial retail real estate developers went big in the beginning of 2018, during the mass exodus of the retail big box, in favor of smaller retail spaces.
Industrial Real Estate and Warehouse
The Chino Hills warehouse and industrial real estate sector remains strong with the recent sale of a 100,326-square-foot warehouse on the northeast corner of Fairfield Ranch Road and Red Barn Court, for $16 million. A key economic factor as to why many warehouse and industrial real estate user based-businesses deem Chino Hills an excellent area for their location is because of its close proximity to the 91 and 15 freeways, allowing for immediate transportation access to Riverside, San Diego Counties and West to Los Angeles, which lowers logistical and warehouse operating costs.
Watson Industrial Park, in the neighboring City of Chino, which began planning in 2007, offers 5.1 Million leasable square feet of industrial office space and warehouses to be complete in 2019, consisting of 11 buildings, located east of the Chino Airport. Considered a mega industrial and warehouse plaza, Watson Industrial Park brings an abundance of jobs and is attracting business operators by having measurably lower annual warehouse operating and shipping costs, because of its shorter distance to Los Angeles and Long Beach Ports, than Ontario, considered the primary economic driving factors for its development. The foreseeable future for Chino and Chino Hills warehouse and industrial real estate will continue in a high demand trend, as Companies look for more LEED-certified spaces to lease or purchase with lower shipping and logistical costs in comparison to City of Industry and Ontario, through 2022.
Commercial Real Estate Retail Developments
In 2018 Chino Hills saw commercial real estate developers finish construction on 3 new commercial retail developments: The Rincon, Soquel Canyon Square and The Santa Barbara. One economic key factor in the decision to develop new Chino Hills commercial retail real estate came about due to the homeowners in the South end of the city being considered an under-served trade area, meaning that the local residents did not have enough retail space to visit, so that they could lead a quality of life, as their neighbors in the North. Quality of life is in reference to an easy and accessible way to shop for necessities, such as food, and have an immediate place where discretionary income may be spent. An additional key factor in the decision to allow for new commercial retail developments is to generate new sales tax revenue for Chino Hills, which goes towards building a better Chino Hills. For the foreseeable future new Chino Hills retail developments will lease at 100%, excluding big box and shopping malls, as there is the underserved trade demographic in need of places to shop, and an ample supply of new housing which organically builds demand for local retail and shopping destinations.
Higher home purchase mortgage interest rates combined with low inflation are key economic factors an apartment community developer analyzes to determine the best time to build. Towards the end of 2018, interest rates on home purchase mortgages reached the mid 5% range and inflation was stable, allowing for the home buying and selling market to change from sellers to buyers market, presenting the perfect time to begin development of new apartment communities in Chino Hills. The Crossings and Santa Barbara, 2 new Chino Hills apartment developments, sprung up to accommodate Chino Hills home buyers waiting for interest rates to decrease, because a monthly mortgage payment is significantly higher when interest rates go above 3.8%. Due to Chino Hills having an ample supply of buildable land coupled with favorable economic impact results for real estate developments and for the foreseeable future, we expect Chino Hills apartment developers to keep building apartment communities, until complete market saturation.
New Hotel Developments
An important, and less of an economic factor that drives the hospitality sector to develop Chino Hills hotels is that of the City having, per capita, the highest concentration of Churches, Temples and Places of Worship, which welcomes national and international visitors. Additionally, the playable and replicas of the major baseball stadiums, catering to local, international and national visitors, coupled with convenient access to the Ontario Airport, and a local, small plane and museum at the Chino airport, contribute as factors. More of an economic factor that drives hospitality developers to build Chino Hills Hotels is because, as the commercial real estate industrial and warehouse sectors build more space to accommodate business operators within Chino Hills and the City of Chino so will the, at times, skilled and temporary workforce be needed who requires temporary housing. Accounting for all of the preceding it’s not wonder why the occupancy rates of Chino Hills Hotels are consistently near 80%. In 2018, Chino Hills hotel developers opened the TownePlace Suites by Marriott to accommodate the need and demand for hotel accommodations. For the foreseeable future new Chino Hills hotel developments will be built until complete market saturation.
We thank you for reading this edition of Chino Hills Real Estate Agent Guide, The economics of Chino Hills real estate, insights and the opportunities they present.
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